Choleragen, the toxin that activates adenylate cyclase in vertebrate cells, bound to liposomes containing ganglioside GMl resulting in a perturbation of membrane structure with release of intraliposomal low molelcular weight compounds. Binding of toxin to surface GMl effectively protected the ganglioside from labeling by galactose oxidase and NaB3H4 or by NaIO4 and NaB3H4. Interaction of choleragen with GMl incorporated into liposomes had the same characteristics and specificity noted with biological membranes. Choleragen, a multivalent oligomeric protein, acted as a bridge between GMl molecules on different cells and liposomes, causing their agglutination. Agglutination was not observed with cells that had been treated with GM2, GDla, or Gdlb. The oligosaccharide of GMl prevented agglutination. Choleragen thus exhibited lectin-like properties. Escherichia coli heat-labile enterotoxin increased cAMP in ganglioside-deficient transformed fibroblasts only after they were treated with GMl. It would appear that GMl acted as a receptor for the E. coli toxin. Activation of adenylate cyclase required NAD and involved the stereospecific ADP-ribosylation of cellular protein. The E. coli toxin thus is catalytically equivalent to choleragen.